Abnormally formed FUS/EWS/TAF15 (FET) fusion oncoproteins are essential oncogenic drivers in many human cancers. Interestingly, at the molecular level, they also form biomolecular condensates at specific loci. However, how these condensates lead to gene transcription and how features encoded in the DNA element regulate condensate formation remain unclear. Here, we develop an in vitro single-molecule assay to visualize phase separation on DNA. Using this technique, we observe that FET fusion proteins undergo phase separation at target binding loci and the phase separated condensates recruit RNA polymerase II and enhance gene transcription. Furthermore, we determine a threshold number of fusion-binding DNA elements that can enhance the formation of FET fusion protein condensates. These findings suggest that FET fusion oncoprotein promotes aberrant gene transcription through loci-specific phase separation, which may contribute to their oncogenic transformation ability in relevant cancers, such as sarcomas and leukemia.